Thank you. Good afternoon, ladies and gentlemen.

Thank you for joining us to hear about EVRAZ full year 2020 results. On this call today, Nikolay Ivanov and myself will be guiding you through our presentation and answering your questions.

Let's start with Slide 5. Global uncertainty caused by outbreak of COVID-19 had a profound effect on economies and pressured global markets.

The restrictive measures had a significant impact on the level of consumption of steel products around the world, especially in the first half of the year. However, thanks to global market improvements in the second half, EVRAZ delivered solid operational and financial results.

In 2020, our EBITDA reached $2.2 billion, and our free cash flow generation remained quite strong, allowing dividends and further debt reduction. In recognition of solid performance, the Board of Directors voted to distribute a total of $437 million or $0.30 per share.

Speaking about ESG on Slide 6, I would like to highlight a few points. During the reported period, we continued to implement measures aimed at improvement of our environmental impact.

In 2020, greenhouse gas intensity ratio remained at the level of 1.97 tCO2e/tcs. Moreover, in 2020, we updated our environmental strategy and set new goals for the period up to 2030, which covers 4 aspects.

Greenhouse gases emissions, air emissions, water and waste. At the group's steel making assets, the goals include reduction of greenhouse gas emissions per ton of steel produced by 20%; a reduction of atmospheric emissions from steel production by 33%; closure of water supply cycle; as well as recycling 95% of general and metallurgical waste.

At the mining assets, the goals include recycling 50% of mining waste and utilizing 75% of methane released as the process of degassing carried out before and during coal mining. For more information, please see the slide as the appendix and our annual report which was published today.

In October 2020, we also published the first dedicated climate change report, prepared in accordance with TCFD recommendations and providing stakeholders with great insight on the actions that EVRAZ is taking. Health and safety remain our top priority and more efforts are required there.

5 people lost their lives during the reporting period. The lost time injury frequency rate reached 1.58, the lowest level for us historically.

In 2020, we improved our nonfinancial disclosure and ESG scores. Please see the slide and the appendix for the details.

Let's move now to Slide 7. Our strategic priorities remain the same as before.

Retention of low-cost position, development of product portfolio and customer base and prudent CapEx and debt management, combined with stable dividends. The next few slides are dedicated to these priorities and 2020 results.

Starting with Slide 8, having vertically integrated low-cost operations is one of our strategic advantages, and this business model has served us well in 2020. Lower raw material prices, weak ruble and our cost-cutting measures had a positive impact on our cash costs, as you can see on this slide.

Turning to Slide 9, efficiency improvement remains our primary focus. EBITDA effect from cost-cutting initiatives totaled $192 million in 2020.

Customer focus program generated another $234 million of EBITDA. Now moving to Slide 10 and CapEx, in 2020, EVRAZ invested a total of $657 million in capital expenditures, of which $458 million was spent on maintenance projects and $199 million on development projects.

Given the volatile conditions in the Russian steel market, management decided to reprioritize the investment portfolio of EVRAZ. The decision was made to postpone the integrated flat casting and rolling facility project in EVRAZ ZSMK and to go ahead with rail and beam modernization project in EVRAZ NTMK which was moved to active implementation.

In North America, EVRAZ Pueblo a new long rail mill project continued according to schedule, with active investment phase having commenced in the second half of 2020. Looking into 2021, our CapEx targets rise to the value of $1 billion, of which approximately $200 million will be allocated to EVRAZ Pueblo in the new long rail mill project.

The next slide is [inaudible] EVRAZ remains focused on medium-term debt management and stable dividend payout. Overall, we ended 2020 with a net debt of $3.4 billion, bringing our net debt-to-EBITDA ratio to 1.5, which is in line with medium-term targets that EVRAZ has set to maintain net debt below $4 billion.

In 2020, we were able to generate robust free cash flow of $1 billion, which made it possible to pay dividends of $872 million, equivalent to a 14% dividend yield. And as I already mentioned, an interim dividend of $437 million was declared by the Board year-to-date.

But now let me say a few words about outlook for 2021, using Slide 12. In 2021, EVRAZ will continue to improve its safety culture, customer focus and operational efficiency using digital tools where appropriate.

The group aims to achieve significant progress in its key investment projects, in particular the rail mills in North America and Nizhny Tagil. EVRAZ will also focus on making the best possible use of the opportunities that arise as the markets begin to recover from the pandemic in 2021.

With this, I would like to pass the word to Nikolay. Thank you.

Nikolay, please.

Thank you, Alexander. Good afternoon, everybody.

So I'm on Slide 14 of the presentation. In 2020, we reported EBITDA of $2.2 billion compared to $2.6 billion in 2019.

The decline was primarily attributable to lower steel, vanadium and coal product sales prices as well as lower sales of tubular and flat-rolled steel products resulting from weakening market demand in North America. Some comments on segment performance.

In steel, revenues dropped by 14.4% year-on-year to almost $7 billion. However, EBITDA increased by 7.5% and amounted to $1.9 billion and lower expenses compared to revenue.

And this is a result of a decline in prices for raw materials, including coal, scrap, other raw materials as well as ruble eliminated cost. For steel North America segment, revenues decreased by 28.8% year-on-year to $1.8 billion.

EBITDA decreased year-on-year as well due to lower revenues from sales of flat rolled, tubular, railway and construction products. In coal segment, revenues fell by 26.3% year-on-year to $1.5 billion, mainly due to a decline in coal product sales price by 35%, which was partly offset by a 9.6% increase in coal product sales volumes.

EBITDA was down amid lower coal product sales prices while the cost of sales was unchanged. Turning your attention now to free cash flow presented on Slide #15.

We were able to deliver robust free cash flow of $1.20 billion for the period. Free cash flow generation was supported by working capital release following a decrease in inventories at coal North America Steel segment as well as decrease in receivables in North American segment because of sales volume decline.

Moving to the next slide, Slide 16, in 2020, our debt management efforts were primarily focused on capital market maturities coming due in the first quarter of 2021. Specifically, in March of last year, we signed a $750 million committed syndicated facility with a group of international banks.

This availability period is till March 2021. At the end of the year, this facility remained undrawn.

Also in March, we utilized RUB 5 billion committed credit facility with VTB and later in April another RUB 15 billion under uncommitted credit facility with the same bank. This action led to an increase in total debt during 2020 by $150 million, almost $5 billion.

And by the end of 2020, we achieved a net debt reduction of $89 million to $3.356 billion. As of December 31, 2020, cash amounted to more than $1.6 billion while short-term loans and the current portion of long-term debt amounted to just over $1 billion.

Cash balances and committed credit facilities available comfortably cover upcoming debt maturity. Moving to Slide 17, Alexander mentioned, yesterday, the Board approved an interim dividend in the total amount of approximately $437 million or $0.30 per share, which will be paid on April 7, 2021.

With this, I would like to thank you for listening to our presentation. As always, we have a few more slides on operational performance, closing the presentation for your review.

And now we are ready to take your questions. Thank you.

I've got a couple of questions. First one, on your U.S.

division. We've seen that some of your colleagues managed to avoid taxation -- deferred taxation on slabs in order to run normally the production chain, supplying slabs from Russia and then rebate the tax amount.

The question is the EVRAZ able to do the same and enjoy Russian slabs at North American facilities? That's my first question.

And second question on the financial side of things on dividends. The dividend amount you announced $437 million, coupled with the first half dividend of similar size, slightly less, I think.

Total is about $700 million, but the free cash flow was around $1 billion. What was the kind of decision -- what was behind this decision to pay not 100% of free cash flow given that the debt situation is not that significant?

And even more so, the market is quite good in the first half of 2021, why doesn't EVRAZ use this money elsewhere?

Okay. That's Alexander Frolov.

Let me start with the first question. I think that you are referring to the case of Novolipetsk who got partial rebate for the taxes they had paid because of so-called 232 section.

It does not mean that slabs for future supply will be exempt from taxation. This is one thing.

Secondly, our North American division has filed claim also for partial refund for the taxes we have paid during the prior year based on success of Novolipetsk. However, it's probably premature to speak about whatever, let's say, whether outcome would be positive or negative just -- we just started the process in the last quarter of 2020.

Then speaking about dividends, I guess, the view was that we still remain a little bit cautious about current situation at the market which is definitely positive. The question is for how long it will last.

And in view of that, the Board decided to take a little bit more conservative approach. Also having in mind that our capital expenditures in 2021 should be high in U.S.

dollars.

Yes, may I specify what was the debated amount in the U.S., So that if I like your peer, you receive one-off rebate in tax payments, what can be the size of this payment?

We answered the question. Shall we move to the next one.

Just a couple of questions on the coal business to start with, so we saw recently the announcement that you're considering spinning out or selling this division. Could you talk a little bit about your thinking on that?

And on a related point, could you perhaps discuss a bit about what you're seeing in domestic coal markets at the moment? Obviously, we've seen prices rise quite a lot for Australian benchmarks.

Are you seeing that feed through into demand and prices for your products as well?

Well, look, starting from your second question, I guess, coal market has improved over the last month or 2. So situation is -- at the moment is relatively good again.

The question is for how long it will last. Talking about your fourth question, I don't think that we are ready to give any further comments on this subject yet.

What we have announced as the management of EVRAZ, has received a task from our Board, a steady reduction of let's say, strategy for coal assets. It does not mean that we are going to sell this business as well.

Again, most probably, the business would be dividend account to the existing shareholders of EVRAZ. That decision is not yet taken.

So that's why I guess it's premature to discuss potential, let's say, benefits or disadvantages.

Okay. And just a couple of questions on your Eurobonds, firstly, on the 2022 which are due in under a year now.

Have you had any thoughts about how you view those? Whether you'll be refinancing or take down bank debt or the cash?

Nikolay, could you answer the question, please? Nikolay?

Are you with us

Yes. Can you hear me?

Not quite well, unfortunately. We were talking about Eurobond refinancing auctions.

Yes. That is correct.

So can you hear me now?

Yes.

Thank you. So this year, we need -- we have to pay approximately USD 1 billion of debt, and all this amount to be exactly $992 million they need to be paid in the first quarter.

As a matter of fact, we already paid $750 million worth of Eurobonds in January of this year, and there will be another payment for Russian ruble bonds in March for approximately $250 million. So, the next payment which need to be made next year, is slightly below $1 billion.

So we still have plenty of time to think about how we want to refinance it. So we have a good -- a few good proposals from the banks, and we obviously have a possibility to raise some public debt.

But again, I think it's too early to speak about the option we will choose. We still have some time for that.

Okay. I mean, my next question is going to be how do you look at your -- how do you see your current Eurobond curve?

I mean, it's getting a little bit more short-dated now and current yields in the market are -- look very attractive. So do you have any thoughts on that?

How does that compare to your bank debt?

Nothing to add to what I said before. Again, what I can say, we are studying different options.

And obviously, we'll look what's the best option for us.

Just a couple of questions from our side. I suppose it would be better if I post it one by one.

So first question, could you please provide us some view where do you see Russian steel production in 2021? Yes, it's first question.

Well, do you mean EVRAZ production or you mean Russian market?

No, I mean -- Russian market, yes, Russian market share.

Well, to answer your questions, first of all, I would probably start with 2020. And I think demand for different products had different dynamics in comparison with 2019, and you can see the details in our presentation.

But just to give an example, market for rebars for example, has declined. At the same time, market for beams and structural has improved.

So in general, we believe that 2021 is going to be a good year, and it will represent close recovery of the markets to the level where they were before last year or before the pandemic. And our plan for 2021 is we'll run full capacity.

So my second question is EVRAZ plans to increase share of hard coal grades in coal production and so maybe could you please provide some exact targets for 2021 and -- for the medium-term of the share of coking coal in production mix, obviously?

Well, look, I think I would suggest we better do it off-line because I don't have all those numbers at the top of my head. What I can say is that additional volumes would be coming from Raspadskaya-Koksovaya mine, where we now have more stable production than we had in 2020.

And that's why we expect better output for the next year. But again, numbers, it's probably better to verify off-line.

Yes. Got it.

So it would be fair to assume, for example, that the production will be somehow closer to 2019 levels, maybe on Raspadskaya-Koksovaya mine?

Again, better to double check. My expectation is the numbers must be better.

But again, percentage-wise, so let's say, total volume, as I said, better to double check off-line.

Great, so -- and yes, please, if it's possible, so 1 more question. We heard about some market movement towards direct contracts.

And so has the company increased the share of direct supply contract with consumers in 2021? And if yes, so would be effect from this on company's average realized price, taking all other things equal, just the effect from increase?

So look, first of all, just to remind you that some of public products, namely rails, are supplied to Russian railroads based on 5-year contract. If you talk about the recent development, for instance, initiative, which was introduced by Russian Steel, that has to do with the developments with direct contract, we are supporting this idea.

However, I don't think that we see a lot of demand on the user side because, I guess, the market is just organized differently, and it will take some time to implement those changes. So that's why I don't think that you should assume any change on average realized price in comparison with the prior period.

I don't think so.

Okay. And just 1 follow-up, small question, the last one from my side.

Am I right that -- I heard that you told that the final decision on spin-off of coal assets has not been taken yet? Yes.

Absolutely, yes.

And so no precise timings? Maybe if you can indicate it there.

Thank you.

What's your outlook for Russian market growth this year reference to market, given that some other competitors came up with quite positive outlook? And second question relates to your CapEx profile, starting from next year?

And would you expect some CapEx slowdown or CapEx may stay at the current level?

I'm sorry. I'm not quite sure that I fully understand your question because the line was not so good.

Starting from your second question, our guidance for CapEx in 2021 is around $1 billion. And it is more than we have spent in 2020, which was on the level of $650 million something.

Then talking about Russian market, I would say we are kind of cautiously positive. We are not bullish.

We believe that there are still, let's say, number of risks and uncertainties in the global steel markets and in the Russian steel market as well.

And my second question was about your CapEx starting from next year. Should we expect it to stay flat versus 2021 or may go down?

Again, that's probably a bit early to say. What I can say for sure, it's not -- it should not be more than $1 billion.

But then the exact numbers will be known more close to the period because basically, all our development projects we approve them at stages. And we are trying to make sure that again, we keep maximum flexibility in case of some -- whatever negative changes in the market.

Just a few for me, first of all, on coal pricing, Given the large difference we're seeing between the traditional Aussie benchmark and prices in China, which is presumably a decent export market for you now that Australian imports have been blocked. Have you had any success in switching some of your domestic contracts over on to that more of a sort of Chinese benchmark rather than the traditional Australia one?

And related to that, how much have your shipments to the Far East increased in recent months since the -- since that block on Aussie imports in China? That's my first question.

I'll ask a follow-up if -- after this one.

Look, starting from your second question, I guess, our shipments to Far East stay more or less at the same level as before. And the reason is that because the capacity of railroad transportation there is limited.

So we are just trying to maintain maximum share in this transportation flow, okay? And it does not depend too much on spot market situation.

Then talking about the Russian market, first of all, again, about 30% of -- let's say a majority of our coal goes to okay? And in this case, it's not very relevant, I mean which kind of benchmark we use.

Again, with the Aussie suppliers back, again, if you have a long-term contract, we just maintain what we had there. At the same time, not all our sales in Russia are based on long-term relationships.

We also have quite significant volume of spot sales and those spot sales, they, of course, reflect the situation that Australian benchmark does not represent the actual market situation.

Understood. And my second question would be on North America.

Obviously, you've temporarily idled some facilities. Could you give us a bit of an indication as to which facilities are currently temporarily idle?

And if you have any plans to bring them back in the near term? And just can you give us some sort of idea as to what is happening in your key markets there as we've seen obviously massive price appreciation in strip steel and some commodity type products, but obviously, tubular and so forth has obviously been lagging.

Could you give us some idea as to what's happening on the demand side? And how are you seeing the operation of those aspects in the near term?

Are you talking about North American assets -- sorry, I didn't hear the question?

Yes, yes, North Americas assets.

Well, look, I don't think that we see anything different in comparison what is publicly available. market is improving, for sure, price wise, also demand wise.

OCTG market also demonstrates positive dynamics. And we are, let's say, fully booked in Canada for Q2 which is a little bit unusual because second quarter was always weakest quarter for the year because of seasonal outbreak.

But at the same time, as the situation is very challenging. And you have seen one of the first actions of new American administration was cancellation of this.

So this is a weak point. Let's say, otherwise, OCTG, for the rails we see positive dynamics.

Understood. And just finally, on your cost savings that you reported or your EBITDA gains, I should say, which were over $400 million and ahead of your original guidance there.

Is all of that structural and kind of permanent in nature? Or some of that is related to temporary short-time working, idling of some of those North American plants?

Well, look, obviously some of those initiatives have short-term nature, meaning that, for example, if it had been an aim, let's say, to export more rails last year, it does not necessarily continue in 2021. But I don't think that a portion of this non-sustainable results are big -- mostly, we are talking about yields and productivity.

Of course, productivity maybe also sometimes impacted by the market demand.

It's Alexey Kirichok from Sber. One question from our side, could you please remind us what is the plan regarding Sobstvenno-Kachkanarsky.

I don't know that was it -- what would be the total CapEx for the first phase? When do you plan to ramp-up first phase full capacity?

And what could be give rather self-efficiency after this deposit capacity? And could be your vanadium production?

How it could change your current level of Sobstvenno-Kachkanarsky to run full capacity?

Well, it doesn't look like 1 question. But anyway, we are progressing with development.

And again, maybe you have not seen those news. But we actually started, let's say, development just during the last month.

And basically, the surface is cleaned and the digging has started out. Then, let's say, on more structural side, we are not developing additional production.

This Sobstvenno-Kachkanarsky deposit should replace one of the existing deposits and total production should remain unchanged. Total CapEx for development of Sobstvenno-Kachkanarsky deposit is about $300 million over the next 5 to 7 years, if I recall correctly.

So no -- so you don't see this as a growth project, just a maintenance one and you don't plan to increase your iron extraction maybe not in the short-term by -- but the midterm and mid-2020, is that correct?

Production would remain the same in total, but just let's say, mining basis, so pace would change with that.

Ladies and gentlemen, we see that there are no further questions, and we would like to end the call. Thank you very much for joining us today and have a great rest of the day.

Thanks again. Bye-bye.

Thank you very much.

Thank you.